The Harvard University Joint Center for Housing Studies estimates U.S. residential construction has lost 2 million workers since 2007. As the industry returns to a level of activity last seen in the same year, the Center reports a growing shortage of skilled construction labor, which could restrict future gains and threaten a full recovery if not addressed soon.
“The construction labor force is almost 20 percent smaller than it was before the housing downturn,” says Kermit Baker, senior research fellow at the Center. “The unemployment rate [for construction workers] is as low as it was at the peak of the market in 2006 and 2007, so it’s not just a matter of bringing folks back off the unemployment rolls or from sitting around their house.”
Developing new sources of skilled labor will require contractors, trade associations and municipalities to work together and rebuild the infrastructure for recruiting and training qualified workers, especially among the millennial generation.
Shortfall lengthening project timelines
A shortage of skilled labor leads to project delays because contractors have trouble lining up the subcontractors they need to get the job done and stay on schedule. This setback complicates a project as contractors scramble to find reliable subcontractors, who struggle to meet the heightened demand and might charge more for their services.
“You’ve got to get the timing [down],” says Steve Melman, director of economic services for the National Association of Home Builders (NAHB). “You’ve got to make sure they are going to be there; otherwise, you delay the whole project, and delaying the project [could] make it more expensive.”
Manufacturers have been suffering from similar labor issues, and the longer lead time on delivering products to the jobsite contributes to higher job costs, says Judy Mozen, 2016 president of the National Association of the Remodeling Industry (NARI) and president of Handcrafted Homes Inc., in Roswell, Georgia.
“If it takes six months to do a job that you could’ve done in three months, it affects your bottom line,” says Mozen, who helped one of her clients select a new range hood only to discover that it would take the manufacturer between four and five months to fulfill the order.
“I’ve got a homeowner living in a house with a remodeled kitchen but not a functioning hood,” Mozen says. “I know I have to have that hood in to pass inspection, so I’m trying to keep my client from using certain things, but it is their house and they live there.”
Customers feeling the labor crunch too
As jobs run longer and longer, many contractors have accumulated a backlog of projects that must be put on hold until they have more time. But some customers have no interest in waiting months for a job to start, so they take their project to a construction company that can embark on it much sooner.
“Our backlog is over three months now, and there’s a point in which people aren’t willing to wait,” says Robert Criner, president of Criner Remodeling in Newport News, Virginia, and 2015 chairman of NAHB Remodelers, the remodeling arm of NAHB. “But if you have the talent and you have people who are winning awards and producing quality work, people will wait for you.”
Contractors have become more cautious, moreover, about piling on new jobs until they know whether they can truly handle the workload. As a result, customers say they have experienced difficulty in receiving project bids from contractors, and when they do, the prices quoted for a job seem excessive.
“There’s no incentive for contractors to be really aggressive [with] their bids if they don’t know [whether] they can deliver or if they’ve got six months of backlog in-house,” Baker says. “I think consumers turn in other directions—and there’s only so much backlog you can reasonably build up.”
Regardless of whom they hire, customers most likely will have to cover the higher costs associated with skilled labor, Criner says. “With the profit margins as thin as they are in the industry, it has to be passed on,” he adds.
Industry lacking educational venues
Before the housing downturn, residential construction could draw upon numerous training programs when the industry sought skilled workers. The lack of opportunities for new labor during the economic recession, however, eliminated the incentive for many contractors and unions to keep these apprenticeships.
“There’s only about half as many [federally approved apprenticeship programs] now as there were 15 years ago,” says Baker, who recently reviewed the official list. “A lot of them scaled back, [and] a lot of them shut down. You can’t just turn a switch and start them up again.”
The negative perception of a tradesman, furthermore, has caused fewer students to regard construction as a viable career path. As long as parents believe their children would be better served attending a four-year college, contractors and trade groups will be hard-pressed in encouraging more young people to join the industry.
“Not everyone wants to go to college, [and] not everyone wants the debt that comes with it,” Mozen says. “We really need to get down to middle school—junior high school—and present ourselves on that level to those schools, school advisers, parents and students, and let them see what it’s all about.”
NARI in particular aims to show parents the earning potential of someone who graduates from a skilled trade program and the cost of attendance, and compare those numbers with someone who graduates from a four-year college. “The truth of the matter is there are a lot of plumbers and electricians I know making six-figure salaries, and so the perception is really distorted,” Mozen says.
Progress requiring more collaboration
Partnerships with trade groups and other local organizations can help drive awareness of the growing labor shortage within the industry. NARI has advised its chapters to team up with local associations to train prospective employees and hire a certain percentage of them upon completion, Mozen says.
She recently attended a meeting in Charlotte, N.C., in which NARI invited members of the Black Chamber of Commerce, the Hispanic Chamber of Commerce and some other professional minority groups “to work together on some of this, and see that everybody could tap into each other’s resources,” she says.
NARI also has asked individual businesses to go directly to schools, PTA meetings and even the media to talk about their employment needs. At one meeting in metropolitan Atlanta, Mozen became familiar with a technical school student and brought her on as an intern, and now she works part-time for Mozen while she finishes her technical program.
“You can go to the technical schools, you can say you’re looking for people, you can meet the students, you can learn what they can do, and you can hire and train,” Mozen says. “If you’re looking for well-trained people, you’re going to have to take that route because you’re not just going to find them sitting around.”
In-house training programs represent another way for contractors to attract more talent and build a stable foundation for their business. Giving employees the opportunity to advance through the company and build their skills over time encourages them to be more accountable and improves the overall quality of work, Criner says.
“I’m very cautious about hiring anybody, particularly on the lower end, because you have to pick the ones you feel can advance,” he says. “You need to find somebody who has the capabilities of being groomed; otherwise, you’re wasting that position and opportunity.”
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